Standard Grain

Joseph Vaclavik is the president at Standard Grain in Chicago. Standard Grain provides futures and options brokerage to farms, feedlots, elevators, processors, end-users and traders. Visit www.standardgrain.com for more information.

Corn Planting 71% Complete

May 08, 2012

·Grains mostly higher overnight led by old crop corn contracts; May corn trading 6.70+ overnight as basis levels explode on supply tightness; Dec corn able to close near unch yesterday after trading sharply lower early in the day

·Soybean prices have been under pressure since last week’s key reversal on the charts; Many traders believe that significant acreage will be switched into soybean given spread action versus corn during the last several weeks

·Rumors of China interest in both old and new crop corn from the US continue among traders

·Crop Progress released yesterday after the close; most of the planting progress numbers were above analyst estimates:

oCorn 71% planted / 53% last week / 47% avg / 32% emerged

oSoybeans 24% planted / 12% last week / 11% avg / 7% emerged

oSpring Wheat 84% planted / 74% last week / 49% avg / 47% emerged

oWinter Wheat 63% good-excellent / 64% last week

·USDA to release May Crop Production report on Thursday morning at 7:30am CST; Traders looking for new crop corn stocks near 1.714bil/bu, which would be an increase of about 130% from this year

·No major changes in weather forecasts, which have been mostly favorable for corn and soybean producers up to this point

Producers should look to add to PUT option positions in December corn on a rally to the 5.35-5.40 areas unless a weather issue is encountered. Producers shouldn’t aim to look a gift horse in the mouth; and a rally in new crop corn without a weather issue and a projected 1.7bil/bu carryout is a gift. We’re not advising to price the entire crop on a marginal rally, but we believe adding to protection is a must.